Supplemental Problems about Partnership Dissolution
1. Presented below is the condensed balance sheet of the partnership of KK, LL and MM who share
profits and losses in the ratio of 6:3:1, respectively.
Cash……………………..…. P85,000
Other Assets ………….. 415,000
Total………………………. P500,000
Liabilities…………………………P 80,000
KK, Capital……………………… 252,000
LL, Capital………………………. 126,000
MM, Capital……………………. 42,000
Total………………………………. P500,000
The partners agree to sell NN 20% of their respective capital balance and profit and loss
interests for a total payment of P90,000. The payment by NN is to be made directly to the
individual partners.
a.
What are the capital balances of the partners after the admission of NN?
b.
Assuming that implied goodwill for revaluation of asset is to be recorded prior to the admission
of NN, what are the capital balances of the partners after admission?
2.
XX, YY and ZZ are partners who share profits and losses in the ratio of 5:3:2, respectively. They
agree to sell 25% of their respective capital and profits and losses ratio for a total payment directly to
the partners in the amount of P140,000. They agree that goodwill or revaluation of assets of P60,000 is
to be recorded prior to admission of AA. The condensed balance sheet of XYZ partnership is as follows:
Cash……………………..…. P60,000
Other Assets ………….. 540,000
Total………………………. P600,000
a.
Liabilities…………………………P 100,000
XX, Capital……………………… 250,000
YY, Capital……………………. 150,000
ZZ, Capital……………………. 100,000
Total………………………………. P600,000
What are the capital balances of the partners after admission of AA?
3.
CC and DD are partners who share profits and losses in the ratio of 7:3, respectively. On October
21, 20X2, their respective capital accounts were as follows:
CC………………….. P35,000
DD…………………. 30,000
P 65,000
On that date, they agreed to admit EE as a partner with a one-third interest in the capital and
profits and losses, and upon his investment of P25,000. The new partnership will begin with a
total capital of P90,000.
a.
Immediately after EE’s admission, what are the capital balance of CC, DD and EE, respectively?
4.
OO and TT are partners with capital balances of P60,000 and P20,000, respectively. Profits and
losses are divided in the ratio of 60:40. OO and TT decided to form a new partnership with GG, who
invested land valued at P15,000 for a 20% capital interest in the new partnership. GG’s cost of the land
was P12,000. The partnership elected to use the bonus method to record the admission of GG into the
partnership.
a.
What will be the capital balances of OO, TT and GG after the admission?
5.
The partnership of Marissa and Olga is being dissolved, and the assets and equities at book
value and fair value and profit and loss ratios at January 1, 20X5 are as follows:
Book Value
Fair Value
Cash………………………………….
P20,000
P20,000
Accounts receivable-net…..
100,000
100,000
Inventories……………………….
50,000
200,000
Plant assets-net………………..
100,000
120,000
P270,000
P440,000
Accounts Payable……………..
Marissa, Capital (50%)………
Olga, Capital (50%)…………..
P50,000
120,000
100,000
P50,000
Marissa and Olga agree to admit Trent into the partnership for a one-third interest. Trent
invests P95,000 cash and a building to be used in the business with a book value of P100,000
and fair value of P120,000.
a.
What are the capital balances of Marissa and Olga after the admission assuming that the assets
are revalued and goodwill is recognized?
6.
MM and NN are partners who have capitals of P6,000 and P4,800 and share profits in the ratio
of 3:2. OO is admitted as a partner upon investing cash of P5,000 for 25% interest, with profits shared
equally.
a.
In case bonus method is used, how much is the bonus?
b.
What are the capital balances after the admission using the bonus method?
c.
In case asset revaluation method is used, how much is the asset revaluation?
d.
What are the capital balances after the admission using the asset revaluation method?
7.
On June 30, 20X5, the statement of financial position for the partnership of CC, MM and PP,
together with their respective profit and loss ratios, were as follows:
Assets, at cost…………………..
P180,000
CC, Loan…………….……………..
CC, Capital (20%)………………
MM, Capital (20%)……….…..
PP, Capital (60%)………………
Total………………………..
P9,000
42,000
39,000
90,000
P180,000
CC decided to retire from the partnership. By mutual agreement, the assets are to be adjusted
to their fair value of P216,000 at June 30, 20X5. It was agreed that the partnership would pay CC
P61,200 cash for CC’s partnership interest, including CC’s loan which is to be repaid in full. No
goodwill is to be recorded.
a.
What are the capital balances of the partners after CC’s retirement?
8.
The December 31, 20X5 statement of financial position of the BB, CC and DD partnership is
summarized as follows:
Cash……………………..…. P100,000
Other Assets, at cost… 500,000
Total………………………. P600,000
CC, Loan …………………………P 100,000
BB, Capital……………………… 100,000
CC, Capital………………………. 200,000
DD, Capital……………………. 200,000
Total………………………………. P600,000
The partners share profits and losses as follows: BB, 20%; CC, 30%; and DD, 50%. CC is retiring
from the partnership and the partners have agreed that other assets should be adjusted to their
fair value of P600,000 at December 31, 20X5. They further agree that CC will receive P244,000
cash for his partnership interest exclusive of the loan, which is to be paid in full. No goodwill
implied by CC’s payment will be recorded.
a.
What are the capital balances of the partners after CC’s retirement?
9.
On June 30, 20X5, the condensed balance sheet for the partnership of DD, FF and GG, together
with their respective capital profit and loss sharing percentages was as follows:
Assets, net of liabilities……..
P320,000
DD, Capital (50%)………………
FF, Capital (30%)……….………
GG, Capital (20%)………………
Total…………………………
P160,000
96,000
64,000
P320,000
DD decided to retire from the partnership and by mutual agreement is to be paid P180,000 out
of partnership funds for his interest. Total goodwill or adjustment in assets implicit in the
agreement is to be recorded.
a.
What are the capital balances of the partners after DD’s retirement?